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San Diego mayor to issue executive order capping fees restaurants are charged by food delivery apps

  Delivery cap would apply to companies like DoorDash
  The proposed cap on fees would apply to third party delivery services like DoorDash.
(DoorDash/TNS)

Gloria’s planned action is in response to a request from 3 council members who say many restaurateurs feel the fees are a financial burden at a time when eateries can’t offer in-person dining

In a move to help San Diego’s financially struggling restaurants, Mayor Todd Gloria plans to issue an executive order next week that would cap the high fees that business owners are charged by third-party delivery companies like DoorDash and Uber Eats, his office announced late Friday.

The decision comes in response to a request this week from three City Council members that Gloria take emergency action to temporarily limit the delivery fees levied on restaurants to no more than 15 percent of the cost of an online order. Should Gloria take action next week, he would be following the lead of other major cities, including Los Angeles and New York City, which have sought to tame the delivery costs restaurants face at a time when many are barely getting by as the spread of COVID-19 has forced a shutdown of in-person dining.

While many San Diego restaurants have temporarily closed their doors, others are trying to stay in business by continuing to offer takeout meals.

“Mayor Gloria intends to release an executive order next week to put a fee cap on third-party delivery services to help provide relief to local restaurants,” said Deputy Chief of Staff Nick Serrano in an emailed statement. “We will be happy to provide additional details when the order is finalized.”

Councilman Stephen Whitburn, joined by fellow council members Marni von Wilpert and Raul Campillo, said they made the request of Gloria after talking to a number of restaurateurs who were concerned about the added financial burden of the elevated fees, which in many instances can be as high as 30 percent or more of an order.

“This doesn’t affect fees that delivery services charge to the consumer,” Whitburn explained. “Those are fees that the consumer can see but the fees charged to the restaurant the public doesn’t see. And this executive order that we are proposing would expire when the emergency is over. So this is very much geared to the fact that with on-site dining currently prohibited, the restaurants are relying on takeout and delivery.

“We’ve heard from so many restaurants that this takes a big bite out of their already reduced revenues. We tried to write this in a way that still enables the delivery services to provide their service and earn revenue and employ local drivers. At the end of the day this will result in more income staying in the pockets of local restaurants who are trying to stay afloat.”

Efforts to reach several delivery services, including DoorDash, Uber Eats and Postmates, for comment on Friday were unsuccessful.

The move by the mayor’s office to address delivery fees comes as state Assemblywoman Lorena Gonzalez, D-San Diego, pushes ahead with a statewide bill she has authored that calls for a permanent, statewide cap on delivery fees. Her legislation, AB 286, which she announced Thursday, would limit the fees to no more than 15 percent of an online order, not including taxes, gratuities, and any other costs charged to customers. The legislation would also require the food delivery platforms to give the customers and restaurants an itemized cost breakdown of each transaction.

Gonzales said she thinks it’s important that such a cap remain in place for the long term, regardless of whether there is a pandemic that restricts restaurant operations.

“There’s no reason to believe they don’t need these limits in the future,” said Gonzalez, who expects that a hearing on her bill could happen by late March or early April. “There’s no self-governing where there’s a responsible shift by these app companies. We think these protections are necessary because the power dynamics won’t change. Delivery isn’t free, and we give this false perception to customers that it can be done at no cost. Someone is bearing that cost and it shouldn’t just be the small restaurants.”

Since Gloria has yet to provide details of what his executive order will say, it remains unclear how long a fee cap would remain in place and what the actual limit would be.


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